Factors Affecting Price determination, and Pricing Strategies

• Foreign market characteristics: Industrial and economic progress, communications and marketing infrastructure, technological equipment, laws and regulations affecting the community affect export performance. When the conditions of the foreign market differ from the domestic market, the problem of obtaining the required information is intensified. This uncertainty and lack of information may increase the likelihood of making false decisions and, consequently, lowering the quality of company performance. After this, it’s better to choose a foreign country that is more similar to the domestic market for export. Obviously, the lack of recognition of the cultural, value, economic and legal characteristics of foreign markets and the selection of inappropriate pricing strategies will provide the grounds for the failure of export companies.

There are two characteristics of the economic situation in each country:

1) The industrial structure 

2)How to distribute income. 

The industrial structure of each country determines the needs of its people for their products and services, and their income levels determine their employment. The distribution of income also depends on the industrial structure and political system of the country and it is very important to determine the type of pricing strategy. 

Another factor that can be considered as a social market factor affecting the pricing process is the culture that dominates the target country. Culture is a set of institutions and methods in a society that is passed from generation to generation and regulates the behavior of the human beings of that society. The kind of culture that expresses the attitudes and attitudes of the people of society. The existence of different social classes in society is considered as a cultural factor, which has a great influence on the choice of the type of pricing strategy. The use of any type of pricing strategy is clearly linked to the culture of a nation.

From a competitive point of view, companies should always consider the impact of their pricing on competitors’ pricing decisions. Under the laws and regulations of the target market, companies are not allowed to choose of price for their products at any level they prefer. For example, there may be price controls that prohibit high pricing for products. On the other hand, if the price is set too low, then the dumping phenomenon will occur. Offering different prices for different customers may also be a violation of the law against price discrimination. Nevertheless, collusion with rivals for fixing the prices at an agreed level, is not illegal in most countries.

The number of countries which the company exports goods and services

The number of countries targeted for export activity is directly linked to pressure on the firm to standardize prices. The degree of similarity or difference between the destination countries and the country of origin has a significant impact on the degree of difficulty of the pricing process. Improving communication technology among buyers has made it more difficult to use a different pricing strategy in different markets for the same product. The use of price discrimination strategies requires the ability to differentiate customers from one another.

Technology improvements:

Technology improvements and communications, have led to the elimination of economic boundaries in the world. As a result, the categorization of foreign markets with the goal of creating a group of people to reduce the pressure from the multiplicity of target countries in choosing the type of marketing strategies, especially pricing strategies, is very important. In addition, the use of different prices in different markets will increase gray marketing activities, and this will also be more severe with the globalization of business.

International Management Experience

Management is related to manager experiences that have gained in a company or industry over many years. Managers do not work in empty environment, but they constantly engage with others. Their experiences are not limited to individual experiences, but also from the organizational experiences gained over time. The manager’s experiences can be effective on the subjective frameworks that the manager or a team of decision-makers put into action.

The manager’s experiences can be effective on export pricing strategies. Some managers believe in matching prices and others tend to standardize prices. Over the past decade, managers with international experience have argued that it is very difficult to use the pricing strategy for similar products in global markets. Chung (2003) concluded that export-qualified companies should pay attention to standardization of prices. In this case, it can be said that no set of strategies can be sure to provide a reliable version for standardization or price adaptation. As a result, the company’s managerial experience is very important to determine the strategy of the pricing.

Pricing – sign series for business terms.

Information

Export pricing decisions are influenced by many factors, and some of them can be easily assessed and monitored by exporters. The important thing to control and evaluate these factors is to collect and use information correctly. Information has a very important role in today’s modern and economic life. The accuracy and extent of the use of information collected depends on factors such as resources, methods of collecting, organizing and analyzing them. Exports can be divided into two groups: the first group includes information related to costs, profits, volume of production and sales of the company that can easily be collected and processed from internal sources. The second group is market-based information that focuses on the competitive environment and customers of the company. Such information can be collected from the status of industry, competitors, and product status. The complexity of pricing decisions requires both types of information to be collected and processed. However, due to the relative importance of each type of data collected, a different behavioral approach to pricing can be used.

Export Trigger: The purpose of the export stimulus is the incentives for the company to determine and exploit the opportunities of the foreign markets. In the export literature, there are two types of passive and reactive export stimuli. Active incentives are related to the deliberate study of the company for export opportunities and reliance on exports. The response stimulus is related to the company’s response to changing conditions in finding export opportunities. The passive stimulus of behavior leads to activities and exports that are at the center of attention of managers, while the incentive for exports can be driven by the simultaneous influence of each two moves. In the past, they believed that companies began to export their products only under the influence of passive motions. Export motivation is effective on the type of pricing strategy. If a company is forced to export its goods due to inappropriate conditions on the domestic market, lower prices at the early stage are more appropriate.

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